Re-examining Corporate Criminal Prosecutions

The Justice Department has been criticized for its reliance on Deferred Prosecution Agreements and Non-Prosecution Agreements.  The FCPA Professor has lead the charge on this concern. 

The Justice Department relies on DPAs and NPAs to avoid the so-called corporate death penalty, a reference to the Arthur Andersen case in 2003, which resulted in the demise of Arthur Andersen and the loss of thousands of jobs.  

Adding to the controversy, the Justice Department, according to press reports, is relying on  DPAs and NPAs for resolving individual criminal cases in the doping investigation.  That seems like a stretch.  Why are DPAs and NPAs being used in individual criminal cases?  What circumstances warrant use of DPAs and NPAs? 

When it comes to individual cases, prosecutors should either bring a case or decline to bring a case.  There is no reason to establish middle grounds.  Of course, in the criminal justice system, there are “stet dockets” which are contingent cases based on successful completion of drug treatment or other service responsibilities.  To the extent prosecutors start to use DPAs and NPAs in federal court, it can be a dangerous expansion of prosecutorial powers into regulatory-type responsibilities.  Prosecutors are not regulators; they do not have the expertise to act as “regulators.”

On the issue of corporate liability, Professor Koehler raises some interesting points: Are we overly concerned about charging companies with criminal violations?  Outside the FCPA, companies are charged with criminal violations and have survived.  It is not inevitable that a company will crumble under the pressure of a criminal indictment.

The issue of corporate criminal liability needs to be reassessed.  A more thoughtful approach needs to be considered.  Although the Andersen result will not occur in every case, it is undeniable that a corporate indictment carries with it the risk of demise of a company.  Moreover, under the current standard of criminal corporate liability under federal common law a corporation can be held criminally liable as a result of the criminal actions of a single, low-level employee.  No matter how large the company and no matter how many policies a company has instituted in an attempt to thwart the criminal conduct at issue.  To avoid indictment, corporations will go to great lengths to be deemed “cooperative” with a government investigation.  

Current Justice Department policy does not require the decision to indict a company to be reviewed in Washington. This is inexplicable since a number of other prosecutorial decisions are subject to review in Washington, including charging of RICO offenses, subpoenas for an attorney or a member of the press, applications for immunity for a grand jury or trial witness, or settlement of  tax and forfeiture counts.  Indeed, individual death penalty cases are required to eb reviewed and approved by the Attorney General. 

There is no reason to omit potential corporate charges to a similar review in Washington D.C.  National oversight is needed and should be imposed in this area.  This lack of oversight is particularly problematic since there are likely to be differences across the country regarding when and how to prosecute corporate crime.

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